Want to be innovative? Try thinking small.

Posted by Knight Stivender on Sep 27, 2017 3:03:18 PM
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Photo by Florian Klauer

I worked many years for a large news media corporation that was enormously disrupted by the Internet.

Google AdWords and programmatic (automated) digital advertising cut into our ability to sell ad space in newspapers, magazines, and newspaper and magazine websites.

Craig's List annihilated our Classifieds revenue. Remember when you'd take out a newspaper ad to offload your old couch?

Zillow, Homefinder and Realtors' own websites made our real estate listings increasingly obsolete.

Print subscription sales plummeted when people realized they could get our content online, for free, on their phones, all the time.

And on and on it went.

In this wars-on-all-fronts environment, outside innovation was largely seen as a threat, and inside innovation was often handled in a panicked, frenzied manner. Those of us trying to invent our way out of the decline tended to set insurmountable expectations for success - all the while allowing ourselves little to no room for failure, no time for traction, no real emphasis on data-driven analysis (no time!), and zero room for healthy reflection.

What I have learned since -- from friends and colleagues in technology, analytics, healthcare, financial services, and media -- is that innovation does not spring fully armed like Athena from Zeus' forehead.

Innovation is iterative. It is a process.

I've put together what I think are some interesting case studies to illustrate this point, along with some tips on how your team can be more systematic and data-driven in your innovating.

How today's category crushers started small

googlecampus

 

Google is part of everything you do now - from how you find services and research anything, to how many of us communicate with email, instant messaging, and video chat. More than 3 million businesses now pay for G-Suite, Google's business tools like Drive, Docs, Sheets, and Slides. And, of course, Google owns YouTube and, because of that, is a content studio as well as a distribution hub.

But before it was any of those things, Google was one simple search engine among a playing field of many. Remember Lycos? Excite? Alta Vista? Ask Jeeves? Google distinguished itself from the pack through iterative innovation - first monetizing its search platform with AdSense and AdWords - then using its vast data resources to integrate into dang near everything else we do. 

 

iphonex

 

Everyone has been reading about the new iPhone X -- a phone that charges without wires, unlocks by looking at your face, and features animated emojis you can anthropomorphize with your own voice.

But it is obviously not the first iPhone. In fact, three months before the launch of that first version, Steve Jobs sent his design team back to the drawing board because there were so many problems with it. The letter "E" jumped all over the touch screen when it was "typed". The battery wouldn't fully charge. Calls were constantly dropped. Etc.

 

 

dyson

 

My guess is you or someone you know has a Dyson vacuum cleaner in your home. The latest, cordless model is only about two years old, but has already exceeded $3 billion dollars in sales. Total sales for Dyson grew about 45% in 2016, in large part because of this particular model.

These battery-powered machines are so popular and Dyson's commitment to them so strong, that some analysts have speculated Dyson may enter the electric car market.

But James Dyson did not one day wake up and invent this magic vacuum cleaner.

In fact, James Dyson iterated his way through 5,000 versions of his machine before he got to the one I need to go home and use later this week. 

 

frontpoint security.png

The global market for home security systems is expected to exceed $100 billion by the year 2020, thanks to the addition of wireless "smart home" features integrated into the security system framework. For example, the Frontpoint security system (pictured here) will allow you to lock and unlock windows, control the thermostat, and open or close the garage door from your phone.

But home security sytems - like vacuum cleaners, mobile phones, search engines, and most everything else conceived by humans, for that matter - began in a much simpler state. After World War I, wealthy Americans began paying "door shakers" to rattle their doorknobs at night to make sure the locks remained locked.

 

marie-van-brittan-brown.jpgClearly, technology could play a role in improving this experience. Sure enough, in 1966, a nurse named Marie Van Brittan Brown (left) invented the precursor to the modern-day security system.

Brown's system made use of a series of peepholes behind which a camera was rigged to slide up and down. Anything the camera picked up on would be projected onto a television monitor. 

 

For future success, consider what's already working

When we fail to think of innovation as an iterative process, we can miss opportunities to capitalize on what's already working for us.

At Alcott, we regularly hear from clients who've been frustrated because they've spent precious advertising resources in markets where they're underperforming. The thought process makes sense; if you know a geography or segment of your market isn't buying your product, perhaps you should tailor a marketing strategy to appeal to them.

But unless you're going to change your product, changing who you sell it to isn't going to be nearly as effective as replicating your current success. Data can help you discover where your greatest strengths are, so you can allocate your budget and time in scaling your success to more people who fit your customer profile.

Customer data is also a source for opportunities to improve or reframe existing products and services, leading to innovations down the road.

 amazon pantry.png

 
Amazon could see from product sales that they had an opportunity in the grocery segment if they could find a way to package it and make it cost effective both for customers and for Amazon. The result of this iterative thinking is Amazon Pantry, which has changed my life.

The way this works is you order household items from Amazon, enough to fill a 45-pound box, which is delivered via a flat rate shipping fee of $5.99. As you order, a graphic shows you what percentage of the box is filled so you can get maximum economy for your order.

What's really cool is that Amazon will chart the stuff you seem to be ordering all the time and offer to put you on a subscription service so you're not having to repeat the order. My own Amazon Pantry subscription includes household items that are either heavy or bulky -- paper towels, cat food, and toilet paper.

 mcpic

 

Everyone is familiar with the value meal concept, and though it has been successful for the fast food industry, overall sales had been in decline.

So last year, a few chains including McDonald's and Wendy's began iterating on what was already working in value meals, creating bundled promotions like "4 for $4" and "McPick2".

In 2016, an average of 35% of customer visits to McDonald's, Wendy's, and Burger King included purchase of a bundled promotion like these. The McPick2 alone drove a 5.4% increase in First Quarter sales for McDonald's, in a time when fast food is threatened by fast casual dining and convenience packaging in grocery stores.

 

CNB Product Design (1)

 

Here's a great example of a legacy company innovating iteratively to save itself from disruptors.
Cable companies are under an existential pressure from streaming services such as Netflix, Hulu, Amazon Video, etc. The quality of programming not only distributed but created by the streaming services compelled more than 1.4 million people to drop their cable access in just one quarter of 2016. The rate of decline continues to ratchet.
comcastlatino

However. Now there are so many great streaming services and all with different distribution deals with various content creators. Depending on the variety of your interests or the interests in your household - you may end up subscribing to two, three, four or more different streaming services. Suddenly that cable bill you no longer pay is more or less back in a different form.

The big telecoms have noticed this and they're trying to win back customers with what the industry calls the "skinny bundle", which is a repackaging of content designed to appeal to different customer profiles. You're looking at an example rolled out by Comcast in March of this year for the Latino market.

Comcast isn't inventing anything new with this, but they are leveraging current assets with information gleaned from competitors to create a new twist on their offerings.

 

As marketers, we are positioned to drive innovation.

We have the basis for thoughtful product design - for iterative innovation - right here in our own marketing departments. There are so many possibilities, opportunities, and solutions hiding in your own data to help build a course for the future for the rest of the organization.

Combine your access to data and expertise around creative with your insights about customer behavior, demographics, and the market - and there are few departments better suited to lead the charge on innovation.

Where will your company go next? Consider an iterative approach to that "next big thing" and -- while it may feel plodding or look less dazzling in the short-term -- we predict success.

 

Knight Stivender is Alcott's Director of Marketing and Business Development. She was named Alumna of the Year by the University of Tennessee's College of Communications in 2016 and Innovator of the Year by the Gannett Company in 2015. She is co-founder of the social enterprise company Girls To The Moon.